One consequence of climate change is that extreme weather events are occurring more often with the potential to cause catastrophic damage more frequently. According to the 2016 Global Risks Report of the World Economic Forum, extreme weather events rank second as the most likely threat to global stability going forward. And my research on the safety and soundness of financial institutions suggests this trend may also threaten the stability of the insurance industry. Extreme weather is expensive for insurance companies and their reinsurers, communities, taxpayers, and also, potentially, capital market investors. And it’s only getting more expensive as climate change increases the frequency of storms and their severity. While more can be done to improve risk pricing and risk management, climate change mitigation is critical for our ability to continue to survive and recover from the catastrophes that lie ahead.

One consequence of climate change is that extreme weather events are occurring more often with the potential to cause catastrophic damage more frequently. According to the 2016 Global Risks Report of the World Economic Forum, extreme weather events rank second as the most likely threat to global stability going forward. And my research on the safety and soundness of financial institutions suggests this trend may also threaten the stability of the insurance industry. Extreme weather is expensive for insurance companies and their reinsurers, communities, taxpayers, and also, potentially, capital market investors. And it’s only getting more expensive as climate change increases the frequency of storms and their severity. While more can be done to improve risk pricing and risk management, climate change mitigation is critical for our ability to continue to survive and recover from the catastrophes that lie ahead.

Julian Enoizi, CEO of Pool Re, the U.K. government-backed terrorism pool, on Tuesday, 13 September, posted a note on the Pool Re’s Web site ahead of the 6 October Global Terrorism Risk Insurance Conference, which will take place in Canberra, Australia. “The terrorist threat is unprecedented and persistent, and our national interests are now threatened at home and overseas,” he wrote. “Terrorism is a global phenomenon and we need to face up to it with an internationally joined-up response involving innovation, creativity, and collaboration.”

Catastrophe risk modeling firm AIR Worldwide (AIR) announced that it has expanded the capabilities of its terrorism risk model to support scenario testing for the United States and twenty-seven other select countries to help companies assess the impact of different attack scenarios on their portfolios and better manage their global terrorism risk. AIR Worldwide is a Verisk Analytics business.

Managing terrorism risk today requires a combination of strategies and tactics that protect people, property, and finances. On the financial side, the choice is whether to retain or transfer the risk via insurance. But the changing pattern of terrorism risk has some companies questioning whether they are adequately insured for business interruption and related losses. And they wonder how to prepare for potential losses from cyber terrorism and other events.

The new Global Catastrophe Recap report, covering July 2016 disasters, reveals that much of China endured substantial seasonal “Mei-Yu” rainfall that led to a dramatic worsening of flooding along the Yangtze River Basin and in the country’s northeast. Total combined economic losses were estimated at $33 billion. Meanwhile, the United States recorded six separate outbreaks of severe convective storms and flash flooding from the Rockies to the East Coast. Total combined economic losses were minimally estimated at $1.5 billion. Only 2 percent of China damage is covered by insurance, compared to nearly 70 percent for U.S. storms.

ISO will collect, aggregate, and help analyze terrorism data this year for the U.S. Department of the Treasury, the federal agency charged with assessing the effectiveness of the federal Terrorism Risk Insurance Program. ISO is a Verisk Analytics.

In December, negotiators at the Paris climate meeting adopted insurance as an instrument to aid climate adaptation. Earlier in the year, the leaders of the G7 pledged to bring climate insurance to 400 million uninsured individuals in poor countries by 2020. Experts welcome these developments, but also highlight the difficulties that policymakers will face in turning the ideas into action. They warn that ill-designed and poorly implemented insurance instruments could fail to reach the goals of negotiators, or worse, prove detrimental to the very people they are intended to protect.

As Storm Frank – which is following on the heels of Storms Eva and Desmond — continues to batter England, Scotland, and Wales, estimates of the cost of the damage wrought continue to rise. The total economic loss caused by the three Storms may well breach £3 billion – and these projections do not include any government spending on flood defenses, estimated to be between £2.3 billion and £2.8 billion.

Economic losses caused by the flooding which has devastated parts of Britain in the past few days could exceed 1.5 billion pounds, and shave 0.2-0.3 percent off GDP growth overall in the first quarter of 2016. Insurers will likely shoulder the bulk of the burden after first Storm Desmond and then Storm Eva saw waters swamp large swathes of the country.

FEMA currently does not have the policy analysis capacity or necessary data to comprehensively analyze different options for making flood insurance more affordable. A new report identifies an approach for the Federal Emergency Management Agency (FEMA) to evaluate policy options for making premiums through the National Flood Insurance Program (NFIP) more affordable for those who have limited ability to pay.

A decade after Hurricane Katrina caused $41 billion in property and casualty insurance losses, the most expensive catastrophe ever experienced by the global insurance industry, rising sea levels are driving up expected economic and insurance losses from hurricane-driven storm surge in coastal cities across the United States. Rising sea levels contributing to increased risk of severe economic damage from flood following a hurricane – and Miami, New York, and Tampa now face greater risk than New Orleans.

Community-based flood insurance — a single insurance policy that in theory would cover an entire community — may create new opportunities to reduce flood losses and enhance the likelihood of communities paying more attention to flood risk mitigation, says a new National Academies report. This option for providing flood insurance, however, would not provide the sole solution for all of the nation’s flood insurance challenges.

Terrorism insurance take-up rates dropped off toward the end of 2014, due to the anxiety stemming from the unexpected expiration of the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA). Through much of 2014, there was uncertainty whether Congress would renew the program, which initially passed in the wake of the 9/11 terrorist attacks. This uncertainty led customers, and potential customers, to change their insurance buying plans.

Current methods used by the National Flood Insurance Program for setting risk-based insurance rates do not fully capture the flood risk for low-lying structures, which are more likely to incur losses because they are subject to longer duration and greater depth of flooding and are flooded more frequently and by smaller flood events, says a new report from the National Research Council. The report offers alternative approaches for calculating risk-based premiums for these structures, ranging from incremental changes to current methods to a complete overhaul of the system, although it does not recommend which approach the NFIP should adopt or what the new rates should be.